NMCA is an acronymn of the common elements found in most EV batteries, particularly when
it comes to legacy autos, or all long range EVs. They are usually a combnation of nickel,
cobalt, mangenese and or alumnium. Obviously we know that Tesla have created a chemistry that
allows them a cathode solely with nickel. However, even though nickel being reasonably abundant,
its like I always say, we need a lot of batteries. So as we need so many batteries,
the only choice is to use elements that are abundant. And we must think in this way.
For example we often hear people talk about lithium, and how it is scarce.
Elon seems to continually reassure about how much lithium there is in the world,
but others are concerned, that although that might be the case, it can take many years until a mine
actually starts producing decent yields. However, there are also batteries that
use sodium instead of lithium, again a more abundant element than lithium.
Although now, EV numbers are still low, and only a small percentage of sales relative to
other vehicles. But if they are to become as big as we all hope, then it can only be done
using elements that are of high abundance. The problem is
trying to still get as much efficiency out of them as possible.
Now you have often hear me discuss LFP batteries, which are an iron based cathode, at length before,
one of the reasons is that iron is far more abundant than nickel, according to Elon by 10
to 100 times. So much research and development is about to poured into R & D on the LFP battery. It
is going to be a core component of new energy. The fact that it is abundant is also of only
one of the advantages too, albeit quite a large one, and the fact iron is thus lower
cost. But it comes with other advantages, like it being a safer, more durable battery.
It is such an important battery chemistry and soon it will be opened to the world when the
patent expires. It should be like the gold rush, trying to develop all sorts of LFP batteries for
various applications. Through global free market innovation. I hope this creates some radical
innovation and revolutionary jumps in technology for these batteries.
As we know once a product is in the free market, the freer the barrier to entry,
less regulation there is, then the product can evolve faster,
a patent expiring is a major removal of barrier to entry.
Then technology can evolve. Perhaps Elon will say anyone who wants to use any 4680 patents, must
open up all their other battery related patents. Which would be inline with the mission. Therefore
Tesla could equally benefit from everyone else's achievements in battery technology.
We are so incredibly early with LFP batteries, or batteries in general, given that EVs are
just going to keep growing exponentially. The backlog will continue to grow, whilst the amount
of EVs they keep making will grow exponentially. Not to mention the amount of batteries we need for
energy. Then think how early on we are with all this. And how much more the industry will improve.
The world might have consumed 100 times more batteries over the next 10 years.
We need so many batteries to succeed with these transitions.
Makes perfect sense the best elements to research
with batteries are abundant ones. Of course eventually we will have recycling, and then we
can significantly reduce the mining for all these resources, but that might be a few decades away.
It sounds like Tesla is still scrambling to make as many batteries as humanly possible.
Hence why Elon has said around 80% of all batteries will be LFP. But now
Elon has been talking about using manganese as a cathode too, on the earnings call.
He also replied to The Limiting Factor on Twitter, when inquiring about what Elon had
said on the call about a manganese cathode. Elon is saying it's an alternative to iron
phosphate. It sounds highly possible that manganese cathodes may be a great solution
for some applications. If manganese can offer higher energy density the iron,
yet still lower cost and highly abundant, then it may be a real break-through.
This is huge news, this is a whole now EV battery chemistry that we just
heard that Tesla are considering. And it has a chance to be brilliant for many applications.
We could hopefully look forward to having a second battery day sometime this year. Hopefully Tesla
will show us their LFP battery, which Elon has specifically said will not be 4680, which is also
what I have been saying for a good part of last year. Anyway, hopefully now everyone believes me.
This means that Tesla will still be using a variety of chemistries, form factors and sizes
with their batteries, it doesn't appear there can be a one size fits all solution, at least
not any time soon, let alone one that scalable and feasible. Therefore I think one of the compromises
in growing faster will be to adapt vehicles to as many different batteries as possible.
Some economies of scale may be lost, but it might mean there are twice as many batteries at Tesla's
disposal, so it would be worth it. Within time all energy batteries will be LFP anyway. CATL can keep
ramping those batteries for Tesla, and Tesla will likely start making a profit with energy.
But as for any new Tesla batteries, I would say 100% chance the form factor will all by
cylindrical, for the simple reason that is the fastest way to manufacturer batteries.
There may end up being some consistency, such as the same height batteries, just different
widths, but who can say. I guess Tesla will keep using 18650 and 2170 batteries for sometime too.
It would be best for Tesla to maintain some consistency of course.
When batteries become more abundant, Tesla can start to choose which batteries to use.
Right now beggars cant be choosers, as there simply isnt much choice.
There will likely be the ability to create more consistency in the battery packs themselves at
least. And they will all be structural, as Elon has said all cars should be made this way, and he
is not the kind of person to look backwards. Could it be that within time, perhaps 5 or
so years, when Tesla has a more solid supply of batteries and varieties more apt for certain use.
The chemistry break up might be like this. The long range and performance
have the 4680 full nickel battery, and would be capable of in excess of 400 miles of range.
Then there could be a medium range, that would be with manganese batteries,
offering 3 to 400 miles. This is a great range, and likely at a good price point by this stage.
Then there would be the LFP standard range, perhaps reaching as high as 300 miles of range
by this stage, with all the new global innovation we hope to see over the next 5 years time.
I think there will also be a lower cost version of the standard range from China, using LFP
batteries. Ironically within time these might actually be the highest cost battery for Tesla,
and yet they are selling them a the lowest cost compared to their other vehicles. You see,
the Chinese are letting Tesla do business there, but with likely huge protectionism
over their battery industry. Where Tesla will continue to order all batteries CATL can make,
but possibly not make their own batteries there.
But this deal also works well for Tesla, as they get to make more cars than could otherwise,
and get to learn a ton about manufacturing. But the margin on a Chinese CATL Model
Y standard range, will never be as a good a Berlin or Austin 4680 Model Y.
For one they can be made cheaper, and 2, they can be sold for more.
Yes, Tesla in China is 100% owned by Tesla, but I think Tesla China,
will always remain a Chinese battery Tesla. But that's fine,
CATL can continue to provide Tesla in Asia. And Tesla can use their resources elsewhere.
The Asian sales are pretty much all extra sales that Tesla would not have had without
CATL anyway. So it doesn't matter than the margin is not as good. And like I said think about much
Tesla learned from Chinese manufacturing. We have seen how fast those Model Y lines have become.
Anyway, the LMO, manganese batteries, well these may come before Tesla's own LFP batteries.
Elon said the manganese could replace the iron in LFP batteries, rather than saying the nickel in
NMC batteries. Implying a similar chemistry set up to iron, and thus the same benefits. Yet manganese
is meant to have an energy density closer to nickel. This is why it's such a big deal.
If Tesla have made a break through with manganese it really could hit the sweet spot for so many
EVs. Thus saving nickel for the vehicles that do require a lot of power and range.
I know Tesla's FSD is mind blowing, and exciting, but so is the battery technology,
and Elon mentioned manganese batteries could be up there too.
Now as I have been saying for sometime, the LFP battery will be a different size, and use whatever
size is most desirable for that chemistry and its intended use, whether its to reduce cost,
or generate better energy density. And the same will apply for the manganese batteries.
In addition to that there will be a different battery size for energy storage, which I have
also been saying will be LFP for even power walls, as it makes so much more sense. Which means price
of power walls should eventually halve. But they will become potentially almost twice as heavy.
So there should be 2 different LFP sizes, one for energy storage, and one for EVs.
Each designed around what is most important for their application.
I think there will be a different standard range in China, that will be committed to
using CATL's LFP batteries, so these other batteries will only apply for Europe and
north American markets possibly. For example Australia might be in the catchment of Shanghai.
We can also take from this, that Tesla has not finished with their battery chemistry yet either.
They have still been playing around with different chemistries and seeing what will fit.
Likely a lot of the lessons that were learned,
and processes that were developed can be plugged into any new battery line.
This could be a huge a break through.